1 00:00:00,320 --> 00:00:03,360 Speaker 1: Now, Contact Energy has reached an agreement to take over 2 00:00:03,440 --> 00:00:05,760 Speaker 1: Mana were Energy in a near two point three billion 3 00:00:05,800 --> 00:00:08,920 Speaker 1: dollar merger. Contacts Chief executive Mike fuj said the merger 4 00:00:08,920 --> 00:00:12,760 Speaker 1: would make Contact more resilient and diversify its generating portfolio. 5 00:00:12,840 --> 00:00:15,720 Speaker 1: The deal is still subject to approval by the Commerce Commission, 6 00:00:15,760 --> 00:00:18,439 Speaker 1: the High Court and shareholders, but the companies would like 7 00:00:18,480 --> 00:00:20,880 Speaker 1: the deal done by early next year, and Contact Energy 8 00:00:20,920 --> 00:00:22,239 Speaker 1: CEO Mike futures. 9 00:00:21,880 --> 00:00:24,560 Speaker 2: With us now, Mike, Hi, how are you going from? 10 00:00:24,680 --> 00:00:25,000 Speaker 2: Very well? 11 00:00:25,040 --> 00:00:27,280 Speaker 1: Thank you? Do you reckon? You'll get permission for this 12 00:00:27,320 --> 00:00:30,520 Speaker 1: given what is going on with the criticism, Jen Taylor's getting. 13 00:00:31,840 --> 00:00:35,040 Speaker 2: Yes. Absolutely, Look, we're very confident that we will. The 14 00:00:35,080 --> 00:00:38,640 Speaker 2: Commerce Commission obviously have to do their due diligence and 15 00:00:38,760 --> 00:00:42,560 Speaker 2: perform the regulatory duty. But we wouldn't be have done 16 00:00:42,600 --> 00:00:44,879 Speaker 2: today's announcement if we didn't believe we had a very 17 00:00:44,880 --> 00:00:48,400 Speaker 2: good case. Remember, this isn't about today's headlines. This is 18 00:00:48,400 --> 00:00:52,000 Speaker 2: about a sixty year investment and so that's what the 19 00:00:52,040 --> 00:00:53,840 Speaker 2: perspective people have to hold there. 20 00:00:54,120 --> 00:00:57,800 Speaker 1: Right, isn't Mana We're a generator and you guys. 21 00:00:57,600 --> 00:01:00,320 Speaker 2: As a generator. Yeah, Mana as a generator and we're 22 00:01:00,320 --> 00:01:01,560 Speaker 2: a generator and retailer. 23 00:01:01,680 --> 00:01:03,560 Speaker 1: Yeah, and so you would be strengthening your position as 24 00:01:03,560 --> 00:01:06,399 Speaker 1: a gen tailor, which is the very thing that is 25 00:01:06,400 --> 00:01:07,800 Speaker 1: copying the criticism. 26 00:01:08,560 --> 00:01:12,280 Speaker 2: No. Look, we can more than adequately supply our retail 27 00:01:12,319 --> 00:01:15,880 Speaker 2: position as it stands today. What this enables us to 28 00:01:15,920 --> 00:01:20,000 Speaker 2: do is to firm up our wholesale portfolio and provide 29 00:01:20,040 --> 00:01:23,360 Speaker 2: more products to commercial industrial New Zealand and to tear 30 00:01:23,440 --> 00:01:26,479 Speaker 2: to retailers that we can more than adequately already supply 31 00:01:26,520 --> 00:01:27,320 Speaker 2: our retail Yeah. 32 00:01:27,560 --> 00:01:30,000 Speaker 1: I just wonder, I mean, because surely the situation they 33 00:01:30,040 --> 00:01:32,040 Speaker 1: would look at is that they would they would ask 34 00:01:32,120 --> 00:01:34,800 Speaker 1: the question, is it better off with Contact owning this 35 00:01:34,880 --> 00:01:38,800 Speaker 1: business or this business supplying wholesale to Contact? And surely 36 00:01:38,840 --> 00:01:40,479 Speaker 1: if that's if that's the question they have to ask, 37 00:01:40,520 --> 00:01:42,040 Speaker 1: they'll probably prefer the latter, wouldn't that? 38 00:01:43,160 --> 00:01:47,120 Speaker 2: No, not necessarily, because remember the hydro that we're buying 39 00:01:47,640 --> 00:01:51,600 Speaker 2: from Manua is winter weighted and our hydro is summer 40 00:01:51,640 --> 00:01:55,560 Speaker 2: weighted spring summer. And the combination actually in and of 41 00:01:55,600 --> 00:01:59,600 Speaker 2: itself frees up generation to be put into market because 42 00:01:59,600 --> 00:02:02,720 Speaker 2: we're not as individuals trying to hedge our position. We've 43 00:02:02,720 --> 00:02:06,120 Speaker 2: got a combined portfolio which we can manage. So overall, 44 00:02:06,280 --> 00:02:09,440 Speaker 2: our assessment is it's better for the market. It frees 45 00:02:09,520 --> 00:02:13,440 Speaker 2: up generation, and as I said earlier today, it underpins 46 00:02:13,760 --> 00:02:17,240 Speaker 2: more renewable intimittent renewable generation, because that's the big dilemma 47 00:02:17,240 --> 00:02:19,639 Speaker 2: we have to solve. What do we do about these 48 00:02:19,680 --> 00:02:20,760 Speaker 2: intimate renewables. 49 00:02:20,880 --> 00:02:23,400 Speaker 1: Yeah, okay, did you see the method X news. 50 00:02:24,720 --> 00:02:28,080 Speaker 2: Yes, yes, that they are considering, and that's a function 51 00:02:28,160 --> 00:02:30,840 Speaker 2: of the gas market. Meth and X does underpin the 52 00:02:30,880 --> 00:02:34,400 Speaker 2: gas market. The upstream gas market has had some real 53 00:02:34,440 --> 00:02:36,840 Speaker 2: issues over the last year or so in terms of 54 00:02:37,320 --> 00:02:40,800 Speaker 2: dry wells being drilled, and so it's probably a natural outcome. 55 00:02:41,320 --> 00:02:43,400 Speaker 2: And what we really need there is we need some 56 00:02:43,480 --> 00:02:46,960 Speaker 2: drilling success from the upstream players and that should bring 57 00:02:46,960 --> 00:02:47,960 Speaker 2: that back under control. 58 00:02:48,040 --> 00:02:50,200 Speaker 1: I'm reading this the very last thing that they said. 59 00:02:50,320 --> 00:02:52,760 Speaker 1: I'm reading as unless there is more gas, we're shutting 60 00:02:52,760 --> 00:02:55,840 Speaker 1: the whole thing down. Are you reading it like that? 61 00:02:55,840 --> 00:02:59,120 Speaker 2: That is Look, that's the logical outcome. But the critical 62 00:02:59,160 --> 00:03:01,680 Speaker 2: thing is that we still have gas reserves in this 63 00:03:01,760 --> 00:03:04,480 Speaker 2: country and we need to go after and drill for them, 64 00:03:04,840 --> 00:03:06,320 Speaker 2: and that will stabilize the situation. 65 00:03:06,560 --> 00:03:08,560 Speaker 1: Do you believe, Mike that there's more gas out there. 66 00:03:09,960 --> 00:03:13,080 Speaker 2: There's always more gas because did you see what Richard 67 00:03:13,080 --> 00:03:17,960 Speaker 2: Tweety said yesterday. Yes, Richard did say we do need 68 00:03:17,960 --> 00:03:21,800 Speaker 2: to He did say Method X should close and alng 69 00:03:22,000 --> 00:03:26,279 Speaker 2: import and alan G import would be a good insurance policy. 70 00:03:26,880 --> 00:03:31,320 Speaker 2: And we are looking at that. But I think obviously 71 00:03:31,560 --> 00:03:36,280 Speaker 2: with Taranaki's still got a bit to give. All in 72 00:03:36,360 --> 00:03:40,160 Speaker 2: gas drilling is always sometimes you had a good run, 73 00:03:40,200 --> 00:03:41,280 Speaker 2: sometimes you had a bad run. 74 00:03:41,320 --> 00:03:43,760 Speaker 1: Mike, he actually said we're running out of gas as 75 00:03:43,800 --> 00:03:46,320 Speaker 1: a country. Do you think he's wrong? I want you 76 00:03:46,360 --> 00:03:47,360 Speaker 1: to tell me he's wrong. 77 00:03:48,200 --> 00:03:50,960 Speaker 2: I wouldn't put it that way. Gas is the matter 78 00:03:51,240 --> 00:03:54,280 Speaker 2: of the technology you bring to bear, the investment you make, 79 00:03:54,880 --> 00:03:57,400 Speaker 2: and how you think about the reservoirs. It's a complex 80 00:03:57,480 --> 00:04:01,320 Speaker 2: technical subject. No one near ever really runs out of gas. 81 00:04:01,320 --> 00:04:04,040 Speaker 2: It just becomes economic at some point to produce it. 82 00:04:04,320 --> 00:04:06,520 Speaker 1: Are you paying meth and X as much for the 83 00:04:06,560 --> 00:04:07,800 Speaker 1: gas as the government. 84 00:04:07,520 --> 00:04:15,160 Speaker 2: Is, that's commercially confidential. We did a very We did 85 00:04:15,240 --> 00:04:19,279 Speaker 2: a good We did a good commercial deal with meth 86 00:04:19,360 --> 00:04:23,760 Speaker 2: and X, which stabilized the electricity market very rapidly, and 87 00:04:23,920 --> 00:04:26,920 Speaker 2: prices have come back down to the lowest in the 88 00:04:26,920 --> 00:04:31,600 Speaker 2: Western world. That's quite not quite the dramatic headline as 89 00:04:31,600 --> 00:04:34,839 Speaker 2: it was a few weeks ago. But the world has 90 00:04:34,880 --> 00:04:36,680 Speaker 2: turned in the electricity market. 91 00:04:37,360 --> 00:04:40,160 Speaker 1: Because it's fallen off off the cliffs so badly. Did 92 00:04:40,160 --> 00:04:41,680 Speaker 1: you think, oh geez, we didn't have to pay that 93 00:04:41,760 --> 00:04:42,920 Speaker 1: much for the gas after all. 94 00:04:43,400 --> 00:04:47,040 Speaker 2: No, No, that's again, that's like the Manuer deal. That's 95 00:04:47,120 --> 00:04:51,560 Speaker 2: just good prudent risk mitigation. And we don't think about 96 00:04:51,680 --> 00:04:54,599 Speaker 2: to today and tomorrow's spot. As I said, our time 97 00:04:54,640 --> 00:04:58,240 Speaker 2: horizon is always over the medium to long term and 98 00:04:58,279 --> 00:05:01,039 Speaker 2: we're looking for common sense and that was the right 99 00:05:01,080 --> 00:05:03,599 Speaker 2: thing to do at that particular time. So absolutely no 100 00:05:03,680 --> 00:05:04,520 Speaker 2: regrets whatsoever. 101 00:05:04,640 --> 00:05:06,040 Speaker 1: Mike. It's good to talk to you always, as I 102 00:05:06,080 --> 00:05:09,080 Speaker 1: really appreciate your time. That's Mike's huge contact Energy CEO. 103 00:05:09,760 --> 00:05:12,920 Speaker 2: For more from Hither Dupless Yellen Drive, listen live to 104 00:05:13,040 --> 00:05:13,559 Speaker 2: news talks. 105 00:05:13,600 --> 00:05:16,760 Speaker 1: It'd be from four pm weekdays, or follow the podcast 106 00:05:16,880 --> 00:05:17,880 Speaker 1: on iHeartRadio.